Getting financial advice leads to 50% more in your KiwiSaver balance

28 October 2020

Research by the Financial Services Council (FSC), Money & You found that Kiwis who receive some form of financial advice on average end up with 50% more money in their KiwiSaver account, as well as numerous other benefits. 

 

Kiwis’ aversion to calling in “a guy”; whether it’s for a broken door or to deal with a stubborn sink, could be a symptom of our nation’s innate DIY personality. 

But as most readers know, when we do it ourselves, the job is usually neither as good nor as timely — in fact, it can often cost us far more down the line. While we can forgive patchwork jibbing at a friend’s house, it does beg the question of how deep our default DIY setting runs, and to what end? 

When it comes to your money, attacking it completely solo has a net negative impact on your final finances. Some amazing research out of the Financial Services Council has found that those who put off seeking advice on their finances are basically shooting themselves in the foot.  

The research found that those who sought out advice on their money had a massive leg up in their financial wellbeing. Kiwis who had managed to get some expertise had a whopping 3.7% more in savings, as well as being more financially stable. 

Not only that, but they had 50% more money in their KiwiSaver accounts. 

If we were to extrapolate this across the average KiwiSaver member in New Zealand, that would mean almost $10,000 more in their KiwiSaver balances. Not only that, but those receiving good advice would then be making far better returns on their KiwiSaver investments, and would end up with an exponentially higher balance when it comes to retirement.

 

What’s digital advice got to do with any of this?

People reading may be thinking “oh great, here’s another story about how rich people can pay people to help them get richer.” And 10 years ago, they might have been right. High-quality advice was tough to come by, and financial advisers typically only want to work with people that have a big enough balance to justify the high commissions on their accounts. However, digital advice has changed this.

Thankfully, digital advice is available for everyone to access, even those with a tiny pool of assets. For example, at kōura, we have over 200 portfolio variants that we use to construct personalised portfolios for our clients. We use digital tools to match every person with a portfolio specific to their goals. The fact we are doing this digitally means that we can provide this service to everyone, not only those with large account balances.

Within KiwiSaver, the biggest value that digital advice also brings to the table is that it doesn’t let members ‘set and forget’.

Digital advisors remind clients to review their account so that their portfolio’s asset allocation can change as they get closer to retirement. Unlike life-stage based KiwiSaver schemes that move customers to an appropriate fund every 5 – 10 years, a digital advisor like kōura rebalances portfolio’s using a glide path so that clients don’t lock in a loss should their ‘life-stage’ change when the market is experiencing a downturn.

 

Don’t stop fixing the sink yourself.

If you’re a hardened Kiwi, I’d encourage you to keep fixing your own sink, try your own jib stopping, have a go whacking the car engine with a spanner. But when it comes to your finances, the stuff you and your family rely on for a happy and wealthy life, don’t do it yourself. 

Getting financial advice doesn’t mean meeting a greasy guy in a designer suit anymore; it can be as simple as going online and checking out the great digital advice tools that are on offer. 

Personal Digital Advisor

To design your advice, we need to know a few of your details.
My name is .
I am years old.
My KiwiSaver balance is approximately .
I regularly contribute to my KiwiSaver.
I contribute of my income,
and my annual pre tax income is
My annual pre tax income is
I intend to use it to purchase my first home.
I expect to purchase my home in less than years.
I make an annual voluntary contribution. of .